Google Is Latest Techie Drawn to Middle America

By Staff Report

Aug. 6, 2006

Google’s newly announced facility in Michigan shows once again that the American heartland can win over tech employers.

The Internet giant’s decision to locate a 1,000-job sales and operations center in the Ann Arbor area comes in the wake of several other tech firms making significant investments in places both outside the traditional U.S. tech hubs and far from offshore centers such as India and China.

Cities including Ann Arbor, Oklahoma City and Twin Falls, Idaho, offer a supply of local college graduates as well as a lower cost of living compared with the Silicon Valley region of California, as well as the tech hubs in Seattle and Boston. Wages in Middle America communities may be higher than in Bangalore or Shenzhen, China. But employers benefit from workers familiar with U.S. cultural norms and avoid the tribulations of collaborating at a distance.

Tax breaks also can play a role. Michigan officials, for example, approved a tax credit valued at more than $38 million over 20 years to woo Google. In addition, the company should benefit from close access to the highly regarded University of Michigan, whose main campus is in Ann Arbor. Michigan Gov. Jennifer Granholm said on her Web site that Google chose Michigan over several other potential locations “because of our highly skilled workforce.”

Google spokeswoman Courtney Hohne confirmed that Michigan’s talent pool was a major factor in the decision to put down roots in the Ann Arbor area. It also didn’t hurt that Google co-founder Larry Page graduated from a Michigan high school and from the University of Michigan.

“We’re delighted to open a new office in the Ann Arbor area,” Page said in a statement. “We hope to establish as wonderful a home in Michigan for Google as I enjoyed while growing up.”

Google’s new facility will be part of its AdWords online advertising program, which is used by organizations to promote products and services on the Web. AdWords ads are displayed along with search results on Google, as well as on other sites.

Hohne says the 1,000 jobs Google expects to create in Michigan over the next five years will include account management and customer support positions. She also says the company could decide to bring on engineering talent at the site. “We’re not going to rule anything out at this point,” she says.

Given its current size, Google is making a substantial commitment to the Ann Arbor region. The company had 6,790 full-time employees as of March 31. Google’s headquarters is in Mountain View, California, in the heart of Silicon Valley. The company also has operations in the Seattle area, India, China and Japan.

It is not the first technology firm to bet on a smaller American community. Computer maker Dell put a manufacturing plant in Lebanon, Tennessee, a technical support facility in Twin Falls and a customer contact facility focused on sales to smaller businesses in Oklahoma City.

Oklahoma City also attracted the attention of computer services company Ciber. Last year, Greenwood Village, Colorado-based Ciber opened a software development center there. Ciber has operations in other U.S. cities not considered tech powerhouses, such as Tampa, Florida, and Edison, New Jersey.

Tech services firm Rural Sourcing employs a similar strategy. It operates in places including Jonesboro, Arkansas.

John Laird, professor in the electrical engineering and computer sciences department of the University of Michigan, is hopeful that Google’s move will help reverse a “brain drain” from Michigan.

“A lot of our students go out to California to get jobs with Microsoft, Google or Intel,” he says. “This has a significant chance of keeping them in the area.”

Ed Frauenheim

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